The term Basis Point (bp) was created to account for fractional changes in bond yields. Since large institutional bond traders can make or lose hundreds of thousands of dollars on fractional moves in interest rates, they divide each percentage point by 100 to gain a more granular level of analysis.

Conversion ratio refers to the number of shares of common stock that could be realized by an investor at varying points along the life of a convertible security. To determine the conversion ratio of a bond, the basic conversion ration formula requires that investors know the current par value of the security to be converted and the conversion price of equity for the transaction.